The BBVA share

The BBVA share closed March at €6.43, a fall of 9.6% over the quarter.

Global economic growth has been stable, in line with the start of 2018, although with greater dynamism in emerging economies and some signs of moderation in developed countries. The economic indicators for the first quarter of the year show global growth to be around a quarterly 1%, similar to the figure recorded during 2017. Economic activity continues to benefit from the good performance of global trade and the solid expansion of industrial output. However, confidence indicators appear to have reached a high, with little room for greater optimism, above all in manufacturing industry. Together with a moderation in retail sales, these factors suggest that recovery in consumption will take more time.

Most stock-market indices posted losses in the first half of the year. In Europe, the Stoxx 50 and the Euro Stoxx 50 fell by 6.7% and 4.1% respectively, while in Spain, the Ibex 35 lost 4.4%. The falls were smaller in the United States, where the S&P index lost 1.2% in the last three months.

Regarding shareholder remuneration, in accordance with the resolution of the Annual General Meeting held on March 16, 2018, a cash payment of €0.15 gross per share was made on April 10, corresponding to the final dividend for 2017. For 2018, subject to the appropriate approval from the corresponding corporate bodies, BBVA plans to make a cash dividend payment in October 2018 and April 2019, pursuant to its shareholder remuneration policy announced by publication of a Significant Event on February 1, 2017.

BBVA share evolution

Compared with European indices (Base indice 100=31-03-2017)

In the Significant Event published on February 1, 2017, BBVA announced its intention of modifying its shareholder remuneration policy to one of a fully cash payment. This policy will be formed each year of an interim dividend (which is expected to be paid in October) and a final dividend (which will be paid out upon completion of the final year and following approval of the application of the result, foreseeably in April). These payouts will be subject to appropriate approval by the corresponding governing bodies. It is expected to be proposed for the consideration of the competent governing bodies a cash payment in a gross amount of euro 0.15 per share to be paid in April as final dividend for 2017.

Shareholder remuneration

(Euros-gross/share)

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Group information

Impact of the initial implementation of IFRS 9

  • The impacts derived from the first application of IFRS 9, as of January 1, 2018, have been registered with a charge to reserves, of approximately €900m, mainly due to the allocation of provisions based on expected losses, compared to the loss model incurred under the previous IAS 39.
  • Reduction of 31 basis points in the fully-loaded CET1 ratio in December 2017.
  • In the risk metrics, there were very few change; lending fell due to reclassification of portfolios; the NPL coverage ratio rose due to the increase in loan-loss provisions.

Results

  • Generalized sustained growth in more recurrent sources of revenue in practically all geographic areas.
  • Operating expenses remain under control, leading to an improvement in the efficiency ratio in comparison with the same period in 2017.
  • Year-on-year reduction of impairment losses on financial assets not valued at fair value with changes in profit (hereinafter, "impairment losses on financial assets").
  • As a result, the net attributable profit was 1,340m, 11.8% higher than the first quarter of 2017.

Net attributable profit (Million euros)

Net attributable profit breakdown(1) (Percentage. 1Q 2018)

(1) Excludes the Corporate Center.

(2) Includes the areas Banking activity in Spain and Non Core Real Estate.

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Balance sheet and business activity

  • Loans and advances to customers (gross) continue to increase in emerging geographies but decline in Spain. The recovery that began in the second half of 2017 continues in the United States.
  • Non-performing loans continue to improve.
  • There was an increase in off-balance-sheet funds, mainly in mutual funds.

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Solvency

  • The capital position is above regulatory requirements.
  • 13 basis points of fully-loaded CET1 were generated in the quarter, strongly supported by the earnings generated between January and March.

Capital and leverage ratios (Percentage as of 31-03-2018)



(1) Data proforma includes + 57 bp of impacts from announced corporate transactions pending to be closed (sale of RE assets to Cerberus and BBVA Chile).

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Risk management

  • Good performance in the quarter of the main credit risk metrics: as of 31-Mar 2018, the NPL ratio closed at 4.4%, the NPL coverage ratio at 73% and the cumulative cost of risk at 0.85%.

NPL and NPL coverage ratios (Percentage)

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Transformation

  • The Group's digital and mobile customer base and digital sales continue to increase in all the geographic areas where BBVA operates.

Digital and mobile customers (Millions)



Dividends

  • On April 10 there was a cash payment of €0.15 gross per share, corresponding to the final dividend for 2017, approved by the General Shareholders' Meeting held on March 16, 2018.

Shareholder remuneration (Euros-gross/share)



Results

  • Good performance of gross income, thanks to a positive trend in more recurring revenue (particularly income from fees and commissions) and NTI.
  • Operating expenses under control.
  • This has led to a further improvement in the efficiency ratio.
  • Impairment losses on financial assets slightly below the figure for the first quarter of 2016.
  • Inclusion of €177m restructuring costs in provisions.
  • As a result, the net attributable profit in the first quarter of 2017 was €1,199m, 69.0% higher than in the same quarter last year and 76.8% higher than posted in the fourth quarter of 2016

Net attributable profit (Million euros)

Net attributable profit breakdown(1) (Percentage 1Q 2018)

(1) Excludes the Corporate Center.

(2) Includes the areas Banking activity in Spain and Non Core Real Estate.

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Business areas

Banking activity in Spain

Highlights

  • Activity impacted by seasonality.
  • Good performance of net fees and commissions.
  • Improvement of efficiency due to the continuous reduction of expenses.
  • Lower impairments, solid asset-quality indicators.

Spain

Gross income. Year-on-year change.

€1,596m

Arrow Up Green

-4.8%

Activity (1)

Year-on-year change, data as of 31-03-2018.

  • Performing loans and advances to customers under management

    -2.4%

  • Customers funds
    under management

    +0.7%

(1) Excluding repos.


Spain

Results

Year-on-year change.

  • Net interest income

    €921m

    Arrow Down Green

    -1.6% (2)

  • Gross income

    €1,596m

    Arrow Down Green

    -4.8% (2)

  • Operating income

    €773m

    Arrow Down Green

    -5.4% (2)

  • Net attributable profit

    €437m

    Arrow Up Green

    +17.3% (2)

(2) Year-on-year changes.


Spain

Risks

NPL coverage ratio

50%


57%

NPL ratio

5.5%


5.4%

Cost of risk

0.32%


0.17%



DEC 17

MAR 18


Spain

Non Core Real Estate

Highlights

  • Positive trend in Spanish real-estate market.
  • Agreement with Cerberus to reduce almost entirely the net real-estate exposure.
  • Significant reduction in net losses.

Spain

Gross income. Year-on-year change.

€-3m

Arrow Down Green

-84.6%

Results

Year-on-year change.

  • Net interest income

    €7 m

    Arrow Up Green

    -27.9% (1)

  • Gross income

    €-3 m

    Arrow Up Green

    -84.6% (1)

  • Operating income

    €-24m

    Arrow Up Green

    -49.6% (1)

  • Net attributable profit

    €-27m

    Arrow Down Green

    -75.0%


Spain

Net exposure

Million euros.

-4.6%

 

6,416

 
 

6,121

6,416 6,121

DEC 17

MAR 18


Spain

The United States

Highlights

  • Lending growth supported by consumer loans.
  • Positive performance of net interest income. Lower impairments.
  • Improvement of efficiency.
  • Net attributable profit affected by the tax reform at the end of 2017.

The United States

Gross income. Year-on-year change at constant exchange rate.

€699m

Arrow Up Green

+11.8%

Activity (1)

Year-on-year change at constant exchange rate. Data as of 31-03-2018.

  • Performing loans and advances to customers under management

    +1.6%

  • Customers funds
    under management

    +5.7%

(1) Excluding repos.


The United States

Results

Year-on-year change at constant exchange rate.

  • Net interest income

    €524m

    Arrow Up Green

    +15.0% (2)

  • Gross income

    €699m

    Arrow Up Green

    +11.8% (2)

  • Operating income

    €264m

    Arrow Up Green

    +20.0% (2)

  • Net attributable profit

    €195m

    Arrow Up Green

    +74.1% (2)

(2) Year-on-year changes at constant exchange rate.


The United States

Risks

NPL coverage ratio

104%


98%

NPL ratio

1.2%


1.2%

Cost of risk

0.43%


0.16%



DEC 17

MAR 18


The United States

Mexico

Highlights

  • In activity, sound growth of retail portfolios.
  • Expenses growth remains below gross income.
  • Double-digit year-on-year growth in net attributable profit.
  • Asset quality indicators continue improving.

Mexico

Gross income. Year-on-year change at constant exchange rate.

€1,711m

Arrow Up Green

+6.0%

Activity (1)

Year-on-year change at constant exchange rate. Data as of 31-03-2018.

  • Performing loans and advances to customers under management

    +4.8%

  • Customers funds
    under management

    +7.6%

(1) Excluding repos.


Mexico

Results

Year-on-year change at constant exchange rate.

  • Net interest income

    €1,317m

    Arrow Up Green

    +8.2% (2)

  • Gross income

    €1,711m

    Arrow Up Green

    +6.0% (2)

  • Operating income

    €1,144m

    Arrow Up Green

    +6.6% (2)

  • Net attributable profit

    €571m

    Arrow Up Green

    +12.5% (2)

(2) Year-on-year changes at constant exchange rates.


Mexico

Risks

NPL coverage ratio

127%


153%

NPL ratio

2.3%


2.1%

Cost of risk

3.24%


3.18%



DEC 17

MAR 18


Mexico

Turkey

Highlights

  • Double-digit year-on-year growth in activity indicators.
  • Sound growth of the recurring revenue items.
  • Control of operating expenses that grow below the level of inflation.
  • Risk indicators affected by the specific deterioration of the commercial portfolio.

Turkey

Gross income. Year-on-year change at constant exchange rate.

€996m

Arrow Up Green

+21.5%

Activity (1)

Year-on-year change at constant exchange rate. Data as of 31-03-2018.

  • Performing loans and advances to customers under management

    +11.8%

  • Customers funds
    under management

    +17.7%

(1) Excluding repos.


Turkey

Results

Year-on-year change at constant exchange rate.

  • Net interest income

    €753m

    Arrow Up Green

    +10.4% (2)

  • Gross income

    €996m

    Arrow Up Green

    +21.5% (2)

  • Operating income

    €642m

    Arrow Up Green

    +30.1% (2)

  • Net attributable profit

    €201m

    Arrow Up Green

    +49.7% (2)

(2) Year-on-year changes at constant exchange rate.


Turkey

Risks

NPL coverage ratio

85%


86%

NPL ratio

3.9%


3.7%

Cost of risk

0.82%


1.17%



DEC 17

MAR 18


Turkey

South America

Highlights

  • Activity continues to grow at a good pace.
  • Good performance in all income statement lines.
  • Expenses grow below the increase rate of gross income.

South America

Gross income. Year-on-year change at constant exchange rates.

€1,079m

Arrow Up Green

+15.4%

Activity (1)

Year-on-year change at constant exchange rates. Data as of 31-03-2018.

  • Performing loans and advances to customers under management

    +11.7%

  • Customers funds
    under management

    +7.9%

(1) Excluding repos.


South
America

Results

Year-on-year change at constant exchange rates.

  • Net interest income

    €792m

    Arrow Up Green

    +14.7% (2)

  • Gross income

    €1,079m

    Arrow Up Green

    +15.4% (2)

  • Operating income

    €595m

    Arrow Up Green

    +20.7% (2)

  • Net attributable profit

    €210m

    Arrow Up Green

    +33.4% (2)

(2) Year-on-year changes at constant exchange rates.


South
America

Risks

NPL coverage ratio

89%


93%

NPL ratio

3.4%


3.6%

Cost of risk

1.32%


1.37%



DEC 17

MAR 18


South
America

Rest of Eurasia

Highlights

  • Positive trend in lending in European branches.
  • Evolution of deposits strongly influenced by the environment of negative interest rates.
  • Earnings improved due to good performance of expenses and impairments.
  • Good performance of NPL ratio and coverage.

Rest of Eurasia

Gross income. Year-on-year change.

€126m

Arrow Down Green

-7.3%

Activity (1)

Year-on-year change. Data as of 31-03-2018.

  • Performing loans and advances to customers under management

    -7.8%

  • Customers funds
    under management

    -33.8%

(1) Excluding repos.


Rest of Eurasia

Results

Year-on-year change.

  • Net interest income

    €43m

    Arrow Up Green

    +7.0% (2)

  • Gross income

    €126m

    Arrow Down Green

    -7.3% (2)

  • Operating income

    €53m

    Arrow Down Green

    -4.9% (2)

  • Net attributable profit

    €47m

    Arrow Up Green

    +19.1% (2)

(2) Year-on-year changes.


Rest of Eurasia

Risks

NPL coverage ratio

74%


88%

NPL ratio

2.4%


2.1%

Cost of risk

-0.16%


-0.35%



DEC 17

MAR 18


Rest of Eurasia

Contact

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912 24 98 21
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Shareholder Office
C/ Azul, 4 – 28050 Madrid
Contact email
accionistas@bbva.com

Quartely report 1Q 2018

Additional information

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